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Hilton targets midscale market with new Tru brand

There’s a new brand in town: Today, Hilton Worldwide announced Tru by Hilton, a new brand that the company is hoping will fill “a massive void in the midscale category” in both the U.S. and Canada.

Hilton Worldwide already has 102 midscale hotels signed up for Tru and an additional 30 in various stages of approval in Atlanta, Dallas, Houston, Chicago, Denver, Portland and Nashville (among others). As Bloomberg notes, the brand does not yet seem to have a presence planned for “pricey markets” like New York and San Francisco, and is instead opting for smaller college towns, near major highways and at resort getaways. The Tru by Hilton prototype was designed to fit urban, suburban, highway and airport-adjacent locations, and is also adaptable to dual-branded hotels.

The first Tru by Hilton hotel is expected to open by the end of 2016 in the U.S., and Phil Cordell, global head of focused-service brands for Hilton, said that the company plans to eventually expand Tru beyond the States.

A new brand for a growing market
While the brand is officially aimed toward “a broad range of travelers who span generations but think alike,” Hilton seems to be focusing Tru toward the millennial demographic with a multipurpose lobby (divided into four zones), a playroom with games and cardio-focused fitness room. Tech elements will include a social media wall, DirecTV, free Wi-Fi, mobile check-in and room selection and a “Digital Key” that works through the Hilton HHonors app. As the Associated Press notes, the price point for the brand will be between $75 to $90 per night—another benefit for cost-conscious millennials.

This is a key point, as Hilton President and CEO Christopher Nassetta explained: A full 40 percent of the demand for hotel rooms comes in this price segment, the largest of any market. Furthermore, as he told the AP, many of the economy and midscale chains offer an "inconsistent product and service delivery." This, Nassetta said, will give Hilton the opportunity to build loyalty among younger travelers.

Many travelers picture midscale and economy hotels as shabby, with a low emphasis on maintenance and upkeep. “At this price point, half the battle is cleanliness,” Nassetta told Bloomberg. To that end, Hilton has signed partnerships with Procter & Gamble, maker of the Swiffer duster, for cleaning supplies at Tru hotels. “This is a space that is ripe for disruption,” Nassetta said of the midscale segment. “Nobody’s really doing it well.”

Gaining a foothold in the midscale sector is key for Hilton, Michael Bellisario, an analyst at Robert W. Baird & Co., noted, explaining that major global brands “have yet to really penetrate” that market, one of the largest in the industry.

As Bloomberg notes, the new brand is launching at a time of concern about slowing economic growth in general and, in particular, declines in hotel shares around the world. Specifically, Hilton’s shares have dropped more than 30 percent over the last year. A new urban brand that focuses on attracting a rapidly growing demographic may just turn things around.